Q&A: Germany and the Greek debt crisis
Albrecht Ritschl of the London School of Economics says Germans should remember their status as postwar debtors when offering advice to Greece, where memories of Nazi atrocities still sting.
Tensions between Germany and Greece are one side effect of the Greek debt crisis. Germany is the country that shoulders the biggest part of the financial aid Greece is receiving from the European Union and International Monetary Fund. Consequently, some German politicians and parts of the media feel entitled to tell Greece what should be done – and Greeks don't seem to like it, judging by the anti-German slogans shown on banners and placards at demonstrations in Athens. Given Germany's history – not just its military one but its history as a debtor – Germans should think again before they criticize, says Albrecht Ritschl, professor of economic history at the London School of Economics, in an interview with the Monitor's Michael Steininger.Skip to next paragraph
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Professor Ritschl, should Germans abstain from giving Greece advice on how to manage the debt crisis?
Germans are perfectly entitled to give advice. The question is more, what kind of stance they should adopt. In Germany right now the public mood is at boiling point, and Germans seem to have conveniently forgotten, that not too long ago Germany had its very own debt problems and got back onto its feet after World War II largely due to very generous debt forgiveness.
Germany is shouldering a big part of the financial aid and Germany reformed its job market in the last 10 years – a process not without pain. Aren’t the Germans entitled to their opinion?
Absolutely, and it is clear that Greece has to embark on structural reforms. The question is, how to sell this, how to advertise it and how to deal with the particular problems of the Greek society.
You just mentioned Germany’s own debt problems. What exactly were you referring to?
Germany’s major debt crises have to do with the two world wars. There was a double debt crisis after World War I, the first one in conjunction with Germany’s hyperinflation in the early 1920s, and the second one beginning in 1931 – pretty much exactly 80 years ago. That was largely about American credit to Germany, which had begun flowing in the mid-1920s. Germany essentially defaulted on that.
After WWII there was not a debt default by the Germans, but a debt forgiveness by the Americans, who as the occupying power in Germany were interested in quick economic stabilization.
How big were these debts problems compared to what Greece is going through right now?